Think Your Workers Are Self Employed? Think Again

A recent appeal case brought before the Supreme Court has highlighted the need for more clarity relating to employment status.

The case was first heard by the Employment Tribunal when engineer, Gary Smith, claimed that he had been unfairly dismissed by Pimlico Plumbers following a heart attack, after having worked for the company for 6 years.

Pimlico Plumbers stated that they had always regarded Mr Smith as self-employed; indeed, HMRC had been treating him as such for tax and VAT purposes since he began working for them. It was, they claimed, their understanding that all engineers were self-employed.

However, the Tribunal heard that Mr Smith had worked very much under the control of the company, having been required to wear their uniform, drive one of their vans (which displayed the company logo), work a minimum of 40 hours, as well as having to apply for time off.

This element of control and obligation suggested that he was in fact employed, a status which carries with it individual rights, including holidays, sick pay and dismissal procedures.

If you employ workers on a “gig” basis, i.e., by contracting them to do individual jobs for your firm, it is essential that you establish their status to avoid any future dispute over employment rights. Do not rely on any perceived existing status, but examine the working relationship you will have with the individual and where the balance of power will lie. Will you be specifying working hours and place of work? Will you be providing tools and materials? Can the individual ask someone else to do the work in their place? Remember, a contract of employment does not necessarily have to be in writing, it can be implied.

Disputes ending up in the courts can be time-consuming, stressful and costly, so establishing the nature of your relationship with a worker from the beginning is essential.

If you need any advice on employment status, please contact our team at Green & Co.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.